Disposals Account

Can anyone help.

Vehicle Cost = 8000
Prov.for depn. = 4625
Part Exchange allowance given = 2000

I calculated a loss of £1375. Is this right?

It then asks you to calculate the cost of the replacement vehicle. I dont have a clue?:confused1:

Comments

  • jewels.p
    jewels.p Registered Posts: 1,774
    Oops just realised it tells you in the Bank Account Summary that 7500 was paid out for a replacement vehicle. Never saw that at first.:blushing:
  • magic_ghost
    magic_ghost Registered Posts: 6 Regular contributor ⭐ ? ⭐
    The way i calculated it was:

    Fixed Asset Cost: 8000
    Less: Accumulated Depreciation: (4625)
    Net Book Value: 3375
    Less: Disposal Proceeds (2000)
    Loss on Disposal: 1375
  • mally
    mally Registered Posts: 14 Regular contributor ⭐ ? ⭐
    jewels.p wrote: »
    Can anyone help.

    Vehicle Cost = 8000
    Prov.for depn. = 4625
    Part Exchange allowance given = 2000

    I calculated a loss of £1375. Is this right?

    It then asks you to calculate the cost of the replacement vehicle. I dont have a clue?:confused1:

    DR Disposal a/c £8000
    CR vehicle a/c £8000

    DR prov for dep a/c £4625
    CR disposal a/c £4625

    DR vehicle a/c £2000
    CR disposal a/c £2000

    DR I/S a/c £1375 (loss on disposal)
    CR disposal a/c £1375

    The balance on the disposal a/c is the profit or loss on disposal (£1375) and the corresponding DE is recorded in the I/S.
  • any2002uk
    any2002uk Registered Posts: 88 ? ? ?
    so that the part exchange total is now
    £1500

    cost
    part exchange £2000// disposal 8000
    bank £7500//

    bal=========1500

    i hope it is correct?
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